334 | The Trap of Keeping Up With the Joneses

We’ve all heard the phrase “keeping up with the Joneses.”

But have you ever considered how much it’s costing you?

In this episode, let’s explore the financial and psychological impacts of keeping up with the Joneses and how to turn things around if you find yourself in this position.

• • what “keeping up with the Joneses” is

  • why your environment can shape your spending

  • social media, comparison, and status

  • the hidden costs of spending to keep up with others

  • how to create a better plan for your finances

  • bonus tip: how to reduce the triggers that make you want to spend to keep up

Episode 333: Looking Rich vs. Building Wealth

Ramit Sethi podcast episode with couple making $100k/month

Atomic Habits by James Clear

Instagram influencer with $10k of debt

Apply for a coaching session

You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey, friend. Welcome back.

Today, I want to talk to you about the concept of keeping up with the Joneses. Last week, we talked about how many lawyers are spending money to look rich, but they aren’t actually keeping money for themselves and building wealth.

A big part of why people spend in that way, why people spend to give off a certain appearance, is this concept of keeping up with the Joneses. Keeping up with the Joneses is when you are spending money to match these different social standards, to match what you’re seeing in the community around you.

Last week, Ramit Sethi’s podcast was with a couple who was making over or almost $100,000 a month, and they were still living paycheck to paycheck. They were still overspending. A big contributor in that situation was that they were spending to match the community around them. They said a few times in that episode, “Well, in our community, in our neighborhood, everyone goes to one of three schools, or everyone does this particular thing,” and so they were spending to fit in with what was happening around them.

This is a common thing. As humans, we want to belong. We want to fit in with the people around us, and so you start to see what the community around you is doing, and you look to that as a measure of what you should be doing, too.

There is a quote from James Clear, I believe it was in his book Atomic Habits, but he said something to the effect of, “The best way to establish a new habit is to put yourself in an environment where that habit is the norm.” And what that means is if I am trying to establish a fitness habit, if I want to work out more, the best way to establish that habit of working out is to put myself in an environment where working out is the norm. I’m going to join a group where the people all work out, and it’s just like, of course, that’s what you do.

If I am trying to fight against my environment, I’m in an environment or a group where everyone just kind of sits, and everyone eats junk food, and they don’t care about their health, then you’re kind of fighting against the grain, and it makes it harder to establish the habit that you want to do. It’s a lot easier to be into fitness to work out more when I’m around people who do that.

The same is true with your spending habits, with the cars that you buy, with the things that you do for your house and the vacations and all of that. You probably are going to default to what is the norm in your social circle. What’s the norm in that community that you’re in.

So just like that couple who’s making almost $100,000, they are defaulting to the three schools that everyone in the community sends their kids to, and the specific vacation places that everyone else does, and this all of these different decisions being driven by their need to belong in this community, to do the same things that they’re doing.

I think this is even more pervasive in the age of social media because you have all of this access to what other people are doing. You can look on Instagram, and you see this person with this kind of car or that new house or they went on this vacation or they got these clothes, and so you’re exposed to more than just your physical community, the people that you see in real life, you’re seeing it digitally as well.

And I think it can drive a subconscious competition. Like I want to do this thing because this person did it. If they can do it, I can do it too. And then there’s also the status piece of it. If this new car or this type of school is a marker for success in this community, well, I want to show that I’m successful too. I’m a lawyer, also. I can do what they’re doing. I live in this same community, too. I can do what they’re doing.

The issue, though, is when you are spending to keep up, and it goes from what you actually want to just what everyone else is telling you you should want. You spend more that way when you’re spending on these things that you should want. When you’re trying to keep up with the Joneses, you’re probably overspending. A lot of times, people go into debt to try to keep up these appearances. So maybe you can’t afford this type of vacation, but because your coworker did it, now you’re going to do it, too, but you put it on a credit card just to show that you can do the same things.

It delays your financial goals because if I’m spending all of my money trying to keep up this certain lifestyle or keep up this appearance to show that I belong in this same community or I can do the same things, now I don’t have money to save, to pay off debt, to invest, to actually build my wealth and achieve my financial goals. And then on top of it all, a lot of times with keeping up with the Joneses, you end up feeling stressed and you are constantly worried about your finances, and there’s always this anxiety there. There’s always this hum of like, “oh, when is the other shoe gonna drop?” Because you’re building this house of cards to keep up the appearance that you can do the same things.

The secret is a lot of times when you’re looking at what other people are doing, and you’re trying to keep up, they’re struggling too. And so everyone is just stressed out trying to keep up this appearance for everyone else, and nobody is actually doing… I won’t say nobody, but a lot of times people are not actually doing the things that they need to do for their finances.

I have told the story on here before, but there was a young woman who talked about how she had gotten into tens of thousands of dollars of credit card debt because she was trying to keep showing a particular lifestyle on Instagram, and so she’s going into debt to finance vacations and clothes and things like that.

And so somebody looking, you know, in from the outside thinks, “Oh my gosh! Like she’s able to do this kind of vacation. She’s able to buy these things. I should be able to do that too.” And now they’re going into debt, trying to keep up with this lifestyle that she’s projecting. Meanwhile, behind the scenes, she’s in debt and she’s struggling trying to keep up that lifestyle, as well.

We can never know what people are actually doing behind the scenes. When you see people, whether it’s real life or social media, you are seeing what they want you to see. Most times, you’re not seeing behind the scenes of what’s happening with their finances, what’s happening within their household.

And so when you are looking at this projection and you’re trying to match that, you are—it’s an apples to oranges comparison, right? Because you don’t know the full story. You don’t know how they’re doing those things. For some, maybe they are setting aside money saving for it. Maybe they do just have a bunch of money, and they’re able to do these things. But for a lot of people, there is some stress and some credit card debt and some, you know, a little bit of a struggle involved. So don’t feel like everybody else just has it figured out, and they can do these things. I should be able to do them, too. It’s all an illusion, or a lot of it is an illusion, right?

What I want you to do is instead of looking to what everybody else is doing to determine what you should be doing, I want you to think about what you actually care about. What matters to you? What do you value? What are those things that are important to you? And when you think about those things, a lot of times it does not include all this other stuff that you’re doing, trying to keep up with what you see your coworker or your neighbor or somebody on social media doing. Maybe some of those things overlap, but it’s probably not the whole laundry list, right?

So think about what you value and what matters to you, and then set your spending goals around that. We talk about planning your spending all the time. Let’s look at okay, how much money is coming in? What do I want to do with that money? Keeping in mind your values, your goals, your needs, your wants. Use all of that to create a plan for how you’re going to spend your money.

Then from there, it’s the same stuff that we talk about, right? It’s creating that gap between your income and your expenses, and then using the money in that gap to achieve your goals. So to build your savings, to pay off debt, to invest, because those are the things that build wealth. Those are the things that create financial stability, and those are the things that are going to eliminate that stress that you might feel when you’re trying to extend yourself so much to keep up a certain appearance.

Another thing that you can do beyond the financial piece is kind of minimizing or eliminating those things that trigger you to try to keep up with the Joneses in the first place. So maybe it is moving to a different place, moving to a different part of town where maybe you’re not in a particular neighborhood where you feel compelled to spend more and more to keep up a certain appearance. Maybe it’s something less drastic, like unfollowing certain influencers that you’re trying to keep up with subconsciously.

If you can eliminate or lessen those triggers, then you are less likely to exhibit those behaviors. You’re less likely to try to keep up. When you’re in an environment, you’re in a group where the habit that you want is the norm, then it makes it a lot easier to establish that habit and to keep up with it. So minimize your exposure to those people that you find yourself trying to keep up with, and get around people who align with the financial goals that you have, or are doing the things that you want to be doing with your finances, because that’s naturally going to rub off on you, too.

Don’t worry about what is going on with everybody else around you and what everybody else has. You don’t know what they’re doing. A lot of times behind the scenes, it looks a mess, even though it looks so nice and pretty on the outside. Do the things that you need to do to achieve your goals. Minimize your exposure to those people that have you competing with them, and put yourself around people who are doing the things that you want to do. And if you need help, please feel free to reach out. You can apply for a coaching session at rhothomas.com/apply.

All right, so that is it for this week’s episode. Please, if you haven’t done so already, subscribe to the show and leave a review. That helps the show to get seen by more people. It’s pushed out more by the podcast platforms, and as always, I appreciate your support.

As you close out, friend, I pray that you take the information you learn here, apply it in your life, and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.